18
Don’t be surprised to see another bid for Brigham
Posted by bakkenAfter yesterday’s news that Statoil ASA was going to acquire Brigham, the long road for Brigham investors appears to be nearing an end. Brigham has 370,000 plus acres in the Williston basin that holds a resource base of 300 million to 500 million barrels of oil. At the acquisition price of $36.50, the 2012 PE multiple looks to be around 16. This seems expensive for a traditional and mature O&G producer, but for a company like Brigham can be viewed as fair value or perhaps even “cheap”. In terms of a “Bakken Pure Play”, Brigham is the only game in town that has significant acreage, a clear competitive advantage and a market cap under 5 billion dollars. Brigham has completed 88 consecutive, successful Bakken and Three Forks long lateral, high frac stage completions in North Dakota averaging 2,797 barrels of oil equivalent during the early 24 hours peak flow period. Brigham often is able to squeeze 20-40% more oil out of every well than their competition… In fact they have copyrighted the slogan “No Oil Left Behind” to stress their ability and acumen to maximize drilling efficiency. In my opinion, the perfect suitor would be a be O&G conglomerate that ALREADY has Bakken acreage, not a overseas O&G firm that is desperately looking for a growth engine. A company with significant Bakken acreage would be able to apply Brigham’s patented processed and techniques on their own properties and derive more overall value from their own portfolio. Something that StatOil will not be able to do with the Brigham Exploration. I wouldn’t be surprised to see a bid in the $39-42 range for Brigham in the next 2 weeks. That would still put the forward PE at a respectable 18 and be less than a $5 billion acquisition which is effectively in the noise for a larger player. It seems that Statoil ASA needs Brigham more than Brigham needs Statoil ASA, we’ll see if I’m right in the coming weeks.
Note: Please note this is just an opinion and does not constitute investment advice
Related posts
Tags: BEXP BId cvx suitor xom
I noted a similar thought in comments after yesterday’s Bakken Stocks,”Bittersweet” article. After sleeping over it I am this morning the proud owner of several hundred November $38 contracts. I was not alone in this bet as there are now roughly 34,000 November $37 and $38 contracts outstanding compared to 271 $36 contracts.
The smart money also made comments backing up this premise:
SunTrust notes this morning: “we would not be surprised if a competing bid emerges for Brigham.” CNBC yesterday noted that “That was a pretty low premium” and replayed the comments this morning.
If however, Statoil was on the other side of the sale of the millions of shares that changed hands yesterday, a tender offer won’t be needed as they would already have most of the shares they need.
Email the NY Tripp Levy law firm at: contact@tripplevy.com to discover why BEXP has a fee of tens of $millions for another company to make a bid for BEXP. They believe a fair value for BEXP is $40 share.
The court will pay the legal expenses, not the shareholders.
Attorneys Weiss & Lurie point out that Jefferies, Brigham’s financial adviser on the deal had set a target of $45 ! I’m trying to sort out which stockholder rights firm to sign with but I will sign.
As of close on 10/18 38,900 November $37 and $38 calls are outstanding, so I am not alone in thinking the bidding has just begun ! Personally, I doubled down on my $37 calls giving me a close BE of $37.50. If anyone else puts their foot in the water or attorney pressure prompts a slight adjustment the ride begins.
My strategy is protect my real shares with signing on a rights suit and put risk money on just out of the money calls.
Firms I am aware of in the game:
Tripp Levy— contact@tripplevy.com
Weiss & Lurie– jsun@weisslurie.com
Kendall Law Group,LLP– investor@kendalllawgroup.com
Howard G. Smith– hsmith@howardsmithlaw.com
Robbins Umeda LLP– llevi@robbinsumeda.com
Levi & Korsinsky– ccargill@levikorsinsky.com
Goldfarb Branham– hlindley@goldfarbbarnham.com
Brodsky-smith– investorrelations@brodsky-smith.com
I’ve been reading parts of the SEC filing. The penalties for Brigham to withdraw are onerous and the construction makes it nearly impossible for a secondary bidder to come to the party as Brigham is allowed to issue as many new shares to Statoil as needed to allow Statoil to reach target. Directors and management receive payoffs that are in the extreme.
The Board and management appears to have betrayed Brigham stockholders and their fiduciary responsibilities for their own benefit. Accordingly, the actions being filed appear to have substantial merit and investors can only hope that a judge will step forward quickly and place an injunction on this deal requiring a fair bidding for Brigham.
I signed with Robbins Umeda LLP and would not be surprised if my case is filed today.
Add A Comment